Question 1

Figure 28-2 
-Refer to Figure 28-2.Suppose the economy is at point A in the figure above.Which of the following is true?

Accepted Answer

Point A represents the long-run equilibrium in the economy where the actual unemployment rate is equal to the natural rate of unemployment. Therefore, choice B is true. The graph does not provide any information about the expected rate of inflation, actual inflation, or the direction of movement from point A.

Question 2

What action should the Fed take if it wants to move from a point on the short-run Phillips curve representing low unemployment and high inflation to a point representing higher unemployment and lower inflation?

Accepted Answer

The answer of What action should the Fed take if...

Question 3

Figure 28-2 
-Refer to Figure 28-2.Suppose the Fed used contractionary policy to push short-run equilibrium to point C.If the short-run equilibrium remained at point C long enough

Accepted Answer

The answer of Figure 28-2 
-Refer to Figure 28-2.Suppose the...

Question 4

Figure 28-2 
-Refer to Figure 28-2.Suppose the economy is at point C in the figure above.If workers adjust their expectations of inflation,which of the following will be true?

Accepted Answer

The answer of Figure 28-2 
-Refer to Figure 28-2.Suppose the...

Question 5

If the unemployment rate in the economy is steady at 4 percent per year,how does the short-run Phillips curve predict that the inflation rate will be changing,if at all? What will happen if the unemployment rate now rises to 7 percent per year? Assume there are no changes to inflation expectations.Provide an appropriate graph to support your discussion.

Accepted Answer

The answer of If the unemployment rate in the economy...

Question 6

Figure 28-2 
-Refer to Figure 28-2.Suppose the Fed used expansionary policy to push short-run equilibrium to point B.If the short-run equilibrium remained at point B long enough

Accepted Answer

The answer of Figure 28-2 
-Refer to Figure 28-2.Suppose the...

Question 7

Figure 28-2 
-Refer to Figure 28-2.At which point is the unemployment rate equal to the natural rate of unemployment?

Accepted Answer

The answer of Figure 28-2 
-Refer to Figure 28-2.At which...

Question 8

If the rate of inflation in the economy is steady at 5 percent per year,how does the short-run Phillips curve predict that the unemployment rate will be changing,if at all? Does your answer change if inflation in the economy is 0 percent? Illustrate your answer with a Phillips curve.

Accepted Answer

The answer of If the rate of inflation in the...

Question 9

Does the short-run Phillips curve have a positive or negative slope? Explain how this slope is derived.

Accepted Answer

The answer of Does the short-run Phillips curve have a...

Question 10

Figure 28-2 
-Refer to Figure 28-2.Suppose the economy is at point A.The Fed uses expansionary monetary policy to lower the unemployment rate permanently below the level associated with A.Which of the following will occur?

Accepted Answer

Lowering the unemployment rate permanently below the natural rate (associated with point A) through expansionary monetary policy will increase aggregate demand and push the economy beyond its potential output. This will create excess demand and pressures on resources, resulting in acceleration of inflation in the long run.

Question 11

The expansionary monetary and fiscal policies of the 1960s resulted in

Accepted Answer

The expansionary monetary and fiscal policies of the 1960s aimed to promote economic growth and reduce unemployment. However, they led to an increase in the money supply, leading to inflationary pressures on prices. This led to high inflation rates during the period, but also resulted in low rates of unemployment as the economy grew. Therefore, the best choice is D, high inflation rates and low rates of unemployment.

Question 12

Figure 28-2 
-Refer to Figure 28-2.Suppose the economy is at point B in the figure above.Which of the following is true?

Accepted Answer

The answer of Figure 28-2 
-Refer to Figure 28-2.Suppose the...

Question 13

Figure 28-2 
-Refer to Figure 28-2.The nonaccelerating inflation rate of unemployment,or NAIRU,is associated with which point rate in the figure above?

Accepted Answer

The answer of Figure 28-2 
-Refer to Figure 28-2.The nonaccelerating...

Question 14

When will a decrease in aggregate demand not result in a lower inflation rate in the short run?

Accepted Answer

The answer of When will a decrease in aggregate demand...

Question 15

Workers at a local construction company are paid $32.50 per hour,and they have incorporated a 4 percent annual raise in their contracts to account for expected inflation.Explain how unexpected inflation of 2 percent will affect the real wages earned by these workers and the unemployment rate of these workers.

Accepted Answer

The answer of Workers at a local construction company are...

Question 16

A decrease in the expected inflation rate will

Accepted Answer

A decrease in expected inflation rate will shift the short-run Phillips curve to the left, indicating that at any given level of unemployment, there will be lower inflation. This is because workers and firms will adjust their expectations and behavior accordingly, leading to lower wages and prices.

Question 17

When will an increase in aggregate demand not result in lower unemployment rates in the short run?

Accepted Answer

The answer of When will an increase in aggregate demand...

Question 18

Figure 28-2 
-Refer to Figure 28-2.Suppose the economy is at point A in the figure above.Which of the following is true?

Accepted Answer

The answer of Figure 28-2 
-Refer to Figure 28-2.Suppose the...

Question 19

If workers accurately predict the rate of inflation,is there a short-run trade-off between inflation and unemployment,as predicted by the Phillips curve? Why or why not?

Accepted Answer

The answer of If workers accurately predict the rate of...

Question 20

Figure 28-2 
-Refer to Figure 28-2.At which point are inflation expectations equal to the actual inflation rate?

Accepted Answer

The answer of Figure 28-2 
-Refer to Figure 28-2.At which...

Quiz 28: Inflation, unemployment, and Federal Reserve Policy

Figure 28-2 -Refer to Figure 28-2.Suppose the economy is at point A in the figure above.Which of the following is true?

What action should the Fed take if it wants to move from a point on the short-run Phillips curve representing low unemployment and high inflation to a point representing higher unemployment and lower inflation?

Figure 28-2 -Refer to Figure 28-2.Suppose the Fed used contractionary policy to push short-run equilibrium to point C.If the short-run equilibrium remained at point C long enough

Figure 28-2 -Refer to Figure 28-2.Suppose the economy is at point C in the figure above.If workers adjust their expectations of inflation,which of the following will be true?

Figure 28-2 -Refer to Figure 28-2.Suppose the Fed used expansionary policy to push short-run equilibrium to point B.If the short-run equilibrium remained at point B long enough

Figure 28-2 -Refer to Figure 28-2.At which point is the unemployment rate equal to the natural rate of unemployment?

If the rate of inflation in the economy is steady at 5 percent per year,how does the short-run Phillips curve predict that the unemployment rate will be changing,if at all? Does your answer change if inflation in the economy is 0 percent? Illustrate your answer with a Phillips curve.

Does the short-run Phillips curve have a positive or negative slope? Explain how this slope is derived.

Figure 28-2 -Refer to Figure 28-2.Suppose the economy is at point A.The Fed uses expansionary monetary policy to lower the unemployment rate permanently below the level associated with A.Which of the following will occur?

The expansionary monetary and fiscal policies of the 1960s resulted in

Figure 28-2 -Refer to Figure 28-2.Suppose the economy is at point B in the figure above.Which of the following is true?

Figure 28-2 -Refer to Figure 28-2.The nonaccelerating inflation rate of unemployment,or NAIRU,is associated with which point rate in the figure above?

When will a decrease in aggregate demand not result in a lower inflation rate in the short run?

A decrease in the expected inflation rate will

When will an increase in aggregate demand not result in lower unemployment rates in the short run?

Figure 28-2 -Refer to Figure 28-2.Suppose the economy is at point A in the figure above.Which of the following is true?

If workers accurately predict the rate of inflation,is there a short-run trade-off between inflation and unemployment,as predicted by the Phillips curve? Why or why not?

Figure 28-2 -Refer to Figure 28-2.At which point are inflation expectations equal to the actual inflation rate?